Christie,
A.C.J.T.C.:—This
appeal
relates
to
the
appellant’s
1980
and
1981
taxation
years.
The
only
issue
in
respect
of
the
1980
taxation
year
is
whether,
in
computing
his
income
for
that
year,
the
appellant
is
entitled
to
deduct
$1,200
in
office
rent
for
the
use
of
a
portion
of
his
matrimonial
home,
the
owner
of
which
is
his
wife.
There
are
two
issues
in
respect
of
1981.
The
first
is
whether
the
appellant
is
entitled
to
a
similar
deduction
in
the
sum
of
$2,400;
the
second
is
whether
the
appellant’s
married
exemption
is
liable
to
be
reduced
by
$696.58
Under
subparagraph
8(1)(i)(ii)
of
the
Income
Tax
Act
("the
Act”),
in
computing
a
taxpayer's
income
for
a
taxation
year
from
employment
there
may
be
deducted
amounts
paid
by
him
in
the
year
as
office
rent,
the
payment
of
which
was
required
by
his
contract
of
employment,
to
the
extent
that
he
has
not
been
reimbursed
and
is
not
entitled
to
be
reimbursed
in
respect
thereof.
Subsection
8(2)
of
the
Act
provides:
“Except
as
permitted
by
this
section,
no
deductions
shall
be
made
in
computing
a
taxpayer's
income
for
a
taxation
year
from
an
office
or
employment.”
In
my
opinion
the
nature
of
the
contract
of
employment
required
to
bring
the
appellant
within
subparagraph
8(1)(i)(ii)
of
the
Act
is
that
described
in
the
judgment
of
the
Federal
Court
of
Appeal
in
The
Queen
v.
Cival,
[1983]
C.T.C.
153;
83
D.T.C.
5168.
This
case
involved
a
claimed
deduction
under
subparagraph
8(1
)(h)(ii)
of
the
Act
which
provides
that,
in
computing
a
taxpayer's
income
for
a
taxation
year
from
employment,
there
may
be
deducted
amounts
expended
by
him
in
the
year
for
travelling
in
the
course
of
his
employment
if,
inter
alia,
under
his
contract
of
employment
he
was
required
to
pay
such
travelling
expenses.
What
was
said
in
Cival
about
the
kind
of
contract
of
employment
envisaged
under
subparagraph
8(1)(h)(ii)
is
equally
applicable
to
subparagraph
8(1)(i)(ii).
When
the
same
word
or
phrase
appear
in
different
subsections
of
the
same
section
of
the
Act,
there
is
a
presumption
that
they
have
the
same
meaning
and
I
regard
the
words
"under
the
contract
of
employment
was
required”
in
subparagraph
8(1)(h)(ii)
to
be
synonymous
with
the
words
"required
by
the
contract
of
employment”
in
subparagraph
8(1)(i)(ii).
In
Thomson
v.
M.N.R.,
[1946]
C.T.C.
51;
2
D.T.C.
812,
the
Supreme
Court
of
Canada
gave
consideration
to
the
meaning
of
the
word
"during"
which
appeared
in
paragraphs
9(a)
and
(b)
of
the
Income
War
Tax
Act.
Mr.
Justice
Estey
said
at
71
(D.T.C.
813):
This
term
“during”
appears
several
times
throughout
the
Act
and
not
only
does
it
appear
in
subsections
(a)
and
(b)
of
section
9,
the
clauses
with
which
we
are
concerned,
but
also
in
othe
subsections
of
this
same
section.
Apart
from
a
specific
provision
or
necessary
implication,
it
would
be
assumed
that
Parliament
intended
these
terms
to
have
the
same
meaning
throughout
these
subsections,
and
indeed
throughout
the
Act.
Mr.
Justice
Ryan
delivered
the
judgment
of
the
Court
in
Cival.
I
believe
it
is
clear
from
what
he
said
at
158
(D.T.C.
5171)
that
the
kind
of
contract
of
employment
envisaged
under
subparagraph
8(1
)(h)(ii)
is
one
that
is
a
legally
binding
contract
between
the
taxpayer
and
his
employer
whereby
the
former
is,
inter
alia,
required
to
incur
the
travelling
expenses
for
which
a
deduction
is
claimed
and
if
he
fails
to
do
so
he
is
suable
by
the
employer
for
breach
of
contract.
The
existence
of
such
a
contract
of
employment
with
a
stipulation
in
it
that
would
bring
the
appellant
within
subparagraph
8(1)(i)(ii)
has
not
been
established.
The
evidence
is
that
the
appellant
was
employed
by
Coulter
Copper
&
Brass
Ltd.
in
1980.
He
was
the
sole
shareholder
of
that
corporation
and
full
control
over
it
was
vested
in
him.
When
he
was
asked
if
his
contract
of
employment
with
Coulter
Copper
&
Brass
was
in
writing
he
replied:
"No,
when
I'm
the
100
per
cent
owner
I
can’t
have
a
written
contract.
It
doesn't
make
sense.”
In
argument
he
returned
to
this
theme
and
said:
"There
is
no
formal
written
agreement,
but
then
there
is
no
second
party
that
could
have
signed
it,
so
it’s
not
possible
to
write
an
agreement.”
While
a
person
who
is
the
only
shareholder
of
and
has
complete
control
over
a
corporation
can
enter
into
a
legally
binding
contract
of
employment
with
it,
I
seriously
question
whether
this
was
possible
as
between
the
appellant
and
Coulter
Copper
&
Brass.
To
my
mind
his
misconception
of
the
legal
relationship
existent
between
hmself
and
the
company,
as
reflected
in
what
has
been
quoted,
eliminates
the
presence
of
that
consensus
which
is
necessary
to
the
process
of
the
formation
of
a
contract.
In
Lee
v.
Lee's
Air
Farming
Ltd.,
[1961]
A.C.
12,
the
question
before
the
Judicial
Committee
of
the
Privy
Council
was
whether
the
appellant’s
deceased
husband,
to
whom
had
been
allotted
2,999
of
the
3,000
shares
of
the
respondent
and
in
whom
“full
government
and
control”
of
the
respondent
had
been
vested,
could
be
a
"worker"
within
the
meaning
of
subsection
3(1)
of
the
Workers'
Compensation
Act,
1922,
of
New
Zealand.
it
provided
that
if,
personal
injury
by
accident
arising
out
of
and
in
the
course
of
the
employment
is
caused
to
a
worker,
his
employer
shall
be
liable
to
pay
compensation.
Under
section
2
"worker"
was
defined
as
any
person
who
has
entered
into
or
works
under
a
contract
of
service
.
.
.
with
an
employer
.
.
.
whether
remunerated
by
wages,
salary,
or
otherwise.
The
appellant’s
husband
had
been
killed
in
an
aircraft
accident
while
crop
dusting.
The
reply
of
the
New
Zealand
Court
of
Appeal
to
the
question
in
issue
was
no.
After
referring
to
the
authority
which
the
deceased
had
over
the
respondent,
North,
J.
said
[1959]
N.Z.L.R.
393
at
399:
These
powers
were
moreover
delegated
to
him
for
life
and
there
remained
with
the
company
no
power
of
management
whatsoever.
One
of
his
first
acts
was
to
apoint
himself
the
only
pilot
of
the
company,
for
although
article
33
(of
the
articles
of
association)
foreshadowed
this
appointment,
yet
a
contract
could
only
spring
into
existence
after
the
company
had
been
incorporated.
Therefore,
he
became
in
effect
both
employer
and
worker.
True,
the
contract
of
employment
was
between
himself
and
the
company:
see
Booth
v.
Helliwell,
[1914]
3
K.B.
252,
but
on
him
lay
the
duty
both
of
giving
orders
and
obeying
them.
In
our
view,
the
two
offices
are
clearly
incompatible.
There
could
exist
no
power
of
control
and
therefore
the
relationship
of
master-servant
was
not
created.
The
Judicial
Committee
disagreed.
Lord
Morris
of
Borth-Y-Gest
noted
that
the
deceased
was
paid
by
the
company
for
carrying
out
crop-dusting
operations;
that
this
was
recorded
in
the
company's
books;
that
the
contracts
were
between
farmers
and
the
company
and
that
all
contractual
rights
and
obligations
were
with
the
company
alone.
His
Lordship
stated
that
the
deceased
could
not
be
regarded
as
discharging
his
duties
as
governing
director
while
engaged
in
the
crop-dusting
activities.
He
said
at
25:
Their
Lordships
find
it
impossible
to
resist
the
conclusion
that
the
active
aerial
operations
were
performed
because
the
deceased
was
in
some
contractual
relationship
with
the
company.
That
relationship
came
about
because
the
deceased
as
one
legal
person
was
willing
to
work
for
and
to
make
a
contract
with
the
company
which
was
another
legal
entity.
A
contractual
relationship
could
only
exist
on
the
basis
that
there
was
consensus
between
two
contracting
parties.
It
was
never
suggested
(nor
in
their
Lordships’
view
could
it
reasonably
have
been
suggested)
that
the
company
was
a
sham
or
a
mere
simulacrum.
It
is
well
established
that
the
mere
fact
that
someone
is
a
director
of
a
company
is
no
impediment
to
his
entering
into
a
contract
to
serve
the
company.
If,
then,
it
be
accepted
that
the
respondent
company
was
a
legal
entity
their
Lordships
see
no
reason
to
challenge
the
validity
of
any
contractual
obligations
which
were
created
between
the
company
and
the
deceased.
After
quoting
a
passage
from
the
reasons
for
judgment
of
Lord
Halsbury,
L.C.
in
Salomon
v.
Salomon
&
Co.,
[1897]
A.C.
22,
he
went
on
at
26-7:
Nor
in
their
Lordships’
view
were
any
contractual
obligations
invalidated
by
the
circumstance
that
the
deceased
was
sole
governing
director
in
whom
was
vested
the
full
government
and
control
of
the
company.
Always
assuming
that
the
company
was
not
a
sham
then
the
capacity
of
the
company
to
make
a
contract
with
the
deceased
could
not
be
impugned
merely
because
the
deceased
was
the
agent
of
the
company
in
its
negotiation.
The
deceased
might
have
made
a
firm
contract
to
serve
the
company
for
a
fixed
period
of
years.
If
within
such
period
he
had
retired
from
the
office
of
governing
director
and
other
directors
had
been
appointed
his
contract
would
not
have
been
affected.
The
circumstance
that
in
his
Capacity
as
a
shareholder
he
could
control
the
course
of
events
would
not
in
itself
affect
the
validity
of
his
contractual
relationship
with
the
company.
When,
therefore,
it
is
said
that
“one
of
his
first
acts
was
to
appoint
himself
the
only
pilot
of
the
company/'
it
must
be
recognised
that
the
appointment
was
made
by
the
company,
and
that
it
was
none
the
less
a
valid
appointment
because
it
was
the
deceased
himself
who
acted
as
the
agent
of
the
company
in
arranging
it.
In
their
Lordships’
view
it
is
a
logical
consequence
of
the
decision
in
Salomon's
case
that
one
person
may
function
in
dual
capacities.
There
is
no
reason,
therefore,
to
deny
the
possibility
of
a
contractual
relationship
being
created
as
between
the
deceased
and
the
company.
If
this
stage
is
reached
then
their
lordships
see
no
reason
why
the
range
of
possible
contractual
relationships
should
not
include
a
contract
for
services,
and
if
the
deceased
as
agent
for
the
company
could
negotiate
a
contract
for
services
as
between
the
company
and
himself
there
is
no
reason
why
a
contract
of
service
could
not
also
be
negotiated.
It
is
said
that
therein
lies
the
difficulty,
because
it
is
said
that
the
deceased
could
not
both
be
under
the
duty
of
giving
orders
and
also
be
under
the
duty
of
obeying
them.
But
this
approach
does
not
give
effect
to
the
circumstance
that
it
would
be
the
company
and
not
the
deceased
that
would
be
giving
the
orders.
Control
would
remain
with
the
company
whoever
might
be
the
agent
of
the
company
to
exercise
it.
The
fact
that
so
long
as
the
deceased
continued
to
be
governing
director,
with
amplitude
of
powers,
it
would
be
for
him
to
act
as
the
agent
of
the
company
to
give
the
orders
does
not
alter
the
fact
that
the
company
and
the
deceased
were
two
separate
and
distinct
legal
persons.
If
the
deceased
had
a
contract
of
service
with
the
company
then
the
company
had
a
right
of
control.
The
manner
of
its
exercise
would
not
affect
or
diminish
the
right
to
its
exercise.
But
the
existence
of
a
right
to
control
cannot
be
denied
if
once
the
reality
of
the
legal
existence
of
the
company
is
recognised.
Just
as
the
company
and
the
deceased
were
separate
legal
entities
so
as
to
permit
of
contractual
relations
being
established
between
them,
so
also
were
they
separate
legal
entities
so
as
to
enable
the
company
to
give
an
order
to
the
deceased.
The
respondent
however
in
reassessing
acted
on
the
assumption
that
there
was
a
contract
of
employment
between
the
appellant
and
Coulter
Copper
&
Brass
Ltd.
This
assumption
is
confirmed
in
the
reply
to
the
notice
of
appeal.
In
the
circumstances
I
believe
I
must
dispose
of
this
case
on
the
supposition
that
there
was
such
a
contract.
But
this
does
not
preclude
the
respondent
from
challenging
an
alleged
term
of
the
contract
as
he
has
done.
Paragraph
4(b)
of
the
reply
to
the
notice
of
appeal
states:
“The
appellant
was
not
required
to
maintain
an
office
in
his
home
pursuant
to
his
contract
of
employment.”
I
believe
that
where
it
is
expressly
or
impliedly
alleged
in
cases
of
the
kind
under
appeal
that
a
taxpayer
having
a
relationship
to
a
company
similar
to
that
which
existed
between
the
appellant
and
Coulter
Copper
&
Brass
Ltd.
was
acting
as
its
agent
in
negotiating
a
verbal
contract
of
employment
with
him,
convincing
confirmatory
proof
of
some
kind
should
be
forthcoming
to
establish
the
terms
of
the
contract
relied
on
in
making
deductions
in
the
computation
of
income.
In
the
absence
of
special
circumstances,
which
I
am
unable
at
present
to
foresee,
I
would
not
in
such
a
case
regard
the
oral
testimony
of
an
interested
party
alone
to
be
a
sufficient
basis
upon
which
to
interfere
with
an
assessment
or
reassessment
by
the
Minister.
In
the
case
at
hand
there
is
neither
special
circumstances
not
convincing
confirmatory
proof.
With
respect
to
1981,
the
shares
of
Coulter
Copper
&
Brass
Ltd.
were
purchased
by
Tri-Canada
Inc.
A
contract
of
employment
between
that
corporation
and
the
appellant
was
entered
in
evidence.
Clauses
6
and
9
read:
6.
The
Employee
shall
be
reimbursed
for
all
travelling
and
other
expenses
actually
and
properly
incurred
by
him
in
connection
with
his
duties
hereunder
and
for
all
such
expenses
he
shall
furnish
statements
and
vouchers
to
the
appropriate
authority.
9.
This
Agreement
constitutes
and
expresses
the
whole
Agreement
of
the
parties
hereto
with
reference
to
the
employment
of
the
employee
by
the
Company
and
with
reference
to
any
of
the
matters
or
things
herein
provided
for
or
herein
before
discussed
or
mentioned
with
reference
to
such
employment
all
promises,
representations
and
understandings
relevant
thereto
being
merged
herein.
I
am
satisfied
that
these
clauses
reflect
the
true
relationship
between
the
appellant
and
Tri-Canada
Inc.
with
regard
to
the
matters
referred
to
therein.
They
establish
that
the
appellant
was
entitled
to
be
reimbursed
for
all
expenses
required
to
be
incurred
by
him
under
his
contract
of
employment.
This
would,
of
course,
include
office
rent
and
disqualifies
him
from
claiming
the
rental
expenses
as
a
deduction
in
computing
his
income.
The
respondent's
reassessment
regarding
the
appellant's
1981
taxation
year
whereby
the
latter's
married
exemption
was
reduced
by
$696.58
came
about
in
this
way.
In
her
return
of
income
for
1981,
the
appellant’s
wife
sought
to
deduct
this
amount
as
rental
expenses
in
respect
of
that
portion
of
the
matrimonial
home
it
is
said
was
rented
by
her
to
her
husband.
On
reassessing
Mrs.
Coulter
in
respect
of
her
1981
taxation
year,
the
respondent
rejected
this
claimed
deduction.
Mrs.
Coulter's
net
income
thereby
increased
by
this
amount
which
in
turn
resulted
in
a
corresponding
decrease
in
the
appellant’s
married
exemption.
Nothing
that
can
be
regarded
as
a
successful
challenge
to
this
course
of
action
on
the
part
of
the
respondent
was
raised
in
the
course
of
the
hearing.
The
appellant
emphasized
that
in
his
1977,
1978
and
1979
taxation
years
he
was
assessed
differently
regarding
claimed
deductions
for
office
rent.
This
cannot
of
itself
give
rise
to
an
inference
adverse
to
the
respondent:
Pinehill
Investments
Limited
v.
M.N.R.,
[1967]
Tax
A.B.C.
233
at
248;
67
D.T.C.
204
at
213-14
and
Trojanowski
v.
M.N.R.,
[1984]
C.T.C.
2841
at
2845;
84
D.T.C.
1705
at
1708.
The
appeal
is
dismissed.
Appeal
dismissed.
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